Oil Rebounds as Gulf Ceasefire Doubts and Hormuz Supply Restrictions Keep Energy Markets on Edge
Crude oil prices climbed back on Thursday as persistent doubts over the durability of a fragile two-week Middle East ceasefire, combined with continued restrictions on shipping through the Strait of Hormuz, kept supply concerns firmly elevated in global energy markets. The rebound follows a dramatic single-session decline that briefly pushed both major benchmarks below the $100-per-barrel mark.
Oil Price Movements
- Brent Crude: Rose $1.96, or 2.07%, to $96.71 per barrel by early GMT trading.
- US West Texas Intermediate (WTI): Climbed $2.60, or 2.75%, to $97.01 per barrel.
The prior session had seen both benchmarks fall sharply below $100 per barrel — with WTI recording its biggest single-session decline since April 2020 — on initial optimism that the ceasefire would result in a swift reopening of the Strait of Hormuz. Thursday's recovery reflects the market's reassessment of that expectation as ground realities paint a more complicated picture.
Why the Ceasefire Is Not Calming Markets
Despite the ceasefire announcement, analysts and market participants remain deeply sceptical about its durability and practical implications for energy flows. Several developments have reinforced this caution:
- Israel continued strikes on Lebanon even after the ceasefire came into effect, prompting Iran to signal it would be "unreasonable" to proceed with talks aimed at forging a permanent peace deal.
- Iran struck a pipeline in Saudi Arabia that had been used as an alternative route to bypass the blockaded Strait of Hormuz — a targeted attack on a key energy workaround. Kuwait, Bahrain, and the UAE also reported missile and drone strikes.
- Shippers remain on the sidelines, stating they need far greater clarity on ceasefire terms before resuming transit through the Strait. Iran has issued maps designating supposedly safe passages around mines in coordination with its Revolutionary Guards — but shipping companies have not yet resumed normal operations.
Vandana Hari, founder of oil market analysis firm Vanda Insights, stated bluntly that the chances of a meaningful reopening of the Strait of Hormuz in the near term look dim, and predicted that oil price volatility would continue. She observed that futures market pricing currently looks distorted — under normal conditions, prices would have snapped back fully to pre-ceasefire levels by now.
Hormuz Constraints to Persist for Weeks: Analysts
Analysts at Standard Chartered warned that a combination of logistical disconnects, security fears, elevated war-risk insurance premiums, and operational constraints means that very little additional energy is likely to flow through the Strait of Hormuz in the next two weeks. The waterway, which typically handles approximately 20% of global oil and gas supply connecting producers such as Iraq, Saudi Arabia, Kuwait, and Qatar to global markets, remains effectively constrained despite the ceasefire announcement.
Goldman Sachs Revises Near-Term Forecasts
Goldman Sachs has made targeted adjustments to its oil price outlook in light of the evolving situation:
- Q2 2026 Brent forecast: Lowered to $90 per barrel (from previous estimates), reflecting a partial reduction in the near-term geopolitical risk premium as Hormuz flows begin edging up marginally.
- Q2 2026 WTI forecast: Revised down to $87 per barrel.
- Q3 2026 forecasts: Maintained at $82 for Brent and $77 for WTI — unchanged.
- Q4 2026 forecasts: Held at $80 for Brent and $75 for WTI — unchanged.
The bank's updated projections suggest that while the acute risk premium embedded in current prices may ease slightly in the near term as Hormuz flows tentatively recover, the structural overhang from the conflict is expected to keep oil prices elevated through the remainder of 2026.
What This Means for Indian Markets
For India — which imports the overwhelming majority of its crude oil requirements — oil prices remaining in the $90–$97 range represent a continued but slightly eased pressure on the trade deficit, inflation, and the rupee compared to the peak levels seen earlier in the conflict. However, with the ceasefire's fragility now apparent and regional energy infrastructure still under attack, the risk of another sharp spike in crude remains very real. Indian investors and policymakers will be watching the Hormuz situation and ceasefire developments extremely closely in the days and weeks ahead.
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